gst credit on freight outward

[Ramakrishnan Seshadri]

Dear Sir,

Good afternoon

Could any please give opinion that the gta paid on freight outwards is eligible for ITC credit. If eligible under which rule it is eligible.

Thanks & REgards,

S.Ramakrishnan

[Himansu Sekhar]

The issue has been deliberated in FAQs which is reproduced below:

[Himansu Sekhar]

Question 28. Can GST charged as per transport bilti on movement of mineral from mine to the buyer be allowed as ITC to the buyer irrespective of the ownership of the transporting vehicle?

Answer: In case of an FOR contract for supply of mineral from the mine to the buyer, it is a composite supply where the consideration will be inclusive of the transportation cost. Therefore, GST on forward charge will be payable by the supplier of the mineral and credit will be available to the buyer if otherwise available. The supplier of the mineral will also pay tax on reverse charge basis on the freight charged by the GTA and the credit of the same will be available to the supplier of the mineral. In case of an ex-works contract of supply, where the GTA service has been booked by the supplier at the instance of the buyer and the service is billed by the GTA to the buyer and the minerals are billed by the supplier of the mineral to the buyer, then GTA on reverse charge shall be paid by the buyer who shall be entitled to take credit of the same. The tax on the mineral will be paid on forward charge by the supplier of the mineral and credit will be available to the buyer if otherwise available.

AI Summary

Input tax credit on freight: FOR composite supply permits buyer ITC; where GTA is billed to buyer, RCM applies. Where goods are supplied on a FOR composite basis, transportation is included in the supplier's consideration: the supplier pays GST on the goods on forward charge and the buyer may claim input tax credit if eligible; the supplier pays tax on freight charged by the GTA under reverse charge and can take credit. Under ex works where the GTA bills the buyer, the buyer pays reverse charge on the GTA service and may claim credit, while the supplier charges tax on the goods on forward charge and the buyer may claim input tax credit if eligible.